Business: CareEdge Ratings in a recent report has estimated that there is a disinvestment potential of about Rs 11.5 lakh crore for the Indian government based on current market capitalisation. This estimate assumes that the government retains at least a 51 per cent stake in central public sector enterprises (CPSEs), allowing it to retain governance control while selling additional shares. This figure is more than double the total disinvestment of Rs 5.2 lakh crore made since 2014, CareEdge Ratings said. Of the potential Rs 11.5 lakh crore, CPSEs could contribute about Rs 5 lakh crore, while public sector banks (PSBs) and insurance firms could potentially add another Rs 6.5 lakh crore.
This is the maximum amount that can be raised at current market prices without the government losing governance control. It added that the disinvestment decision will likely be influenced by the strategic nature of the industry, company profitability, financial market conditions, and social or welfare considerations.
CareAge Ratings chief economist Rajni Sinha stressed the need for a new disinvestment strategy after the government missed targets for five consecutive years. “In the medium term, the government cannot rely solely on small ticket sales of minority shares by OFS (offer for sale) to meet its disinvestment target and should take a fresh look at big ticket disinvestment plans, especially if the CPSE continues to be loss making,” she said. Sinha said the conclusion of the election season and stock markets at all-time highs provide an ideal opportunity for key disinvestment initiatives. However, past issues such as procedural delays, litigation by labour unions and pricing issues continue to hamper progress despite favourable market conditions. The interim budget lowered the disinvestment estimate to ₹30,000 crore from the earlier budgeted ₹51,000 crore. Data from the Department of Investment and Public Asset Management (DIPAM) showed that total disinvestment in FY24 was even lower than the revised estimate, reaching around ₹16,500 crore, which is about 32 per cent of the initial target. This shortfall was a result of the absence of big-ticket disinvestments. Looking ahead, CareAge believes the government will retain its disinvestment target in the upcoming Budget at ₹50,000 crore, similar to the interim Budget figure.Achieving this target depends on the government’s ability to go ahead with large-scale disinvestment, it said. After divestment of Shipping Corporation of India’s (SCI) land assets, its potential disinvestment is possible in FY25, provided market conditions are favourable. If the government sells its entire stake in SCI, it could generate proceeds of ₹12,500-22,500 crore. Other potential disinvestments include Pawan Hans and Concor, though they are being delayed, the report said.
